Global Affairs

Analysts, diplomats, and journalists spent overnight Saturday and into Sunday outlining both the meaning and the implications of an interim agreement secured last night between the P5+1 global powers and Iran. Controversy erupted not just over the substance of the deal – whether it met the benchmark previously set by President Obama to prevent Iran from “advancing their program” – but even over what the deal explicitly did and did not promise.

Western concessions – according to Mark Dubowitz, executive director of the Foundation for Defense of Democracies – will inject Iran with financial relief ultimately worth roughly $20 billion.

In exchange – per a quick New York Timesassessment – Iran agreed to concessions that not only fall short of “roll[ing] back the vast majority of the advances Iran has made in the past five years,” but that shorten its breakout time by “only a month to a few months.” The interim deal allows Iran to continue enriching uranium to 5% purity and to keep building new centrifuges to repair worn ones. Iran will have to convert its 20% enriched stock either to fuel or to diluted 5% stock, but those processes can be easily reversed within weeks. The only way to put that material beyond use is to actually irradiate the stock, but Iran doesn’t have the capacity to do that. In any case experts from the University of Virginia and the U. S.-based Institute for Science and International Security (ISIS) recently warned [PDF]) that Iran can sneak across the nuclear finish line using only its stockpile of 3.5% enriched uranium. Inasmuch as Iran is not being forced to dismantle its centrifuges, there are fears it will either cheat or just wait six months and use them when the interim period expires.

More controversially, Iran seems to have secured language under which the international community acknowledges that a comprehensive agreement will still allow Tehran to enrich uranium. The U.S. has long rejected Iran’s claim that it has a “right” to enrich, and last October lead U.S. negotiator Wendy Sherman told Congress that “the President has circumscribed what he means by the Iranian people having access… access, not right, but access to peaceful nuclear energy in the context of meeting its obligations.” The interim language, however, describes a future comprehensive solution as involving “a mutually defined enrichment program with practical limits and transparency measures to ensure the peaceful nature of the program.” Iranian state media carried boasts by among others Iranian President Hassan Rouhani and Foreign Minister Javad Zarif that the U.S. had caved on its long-standing position. The U.S. and Britain both flatly denied Iran’s interpretation of the interim language with Secretary of State John Kerry saying as much and the White House further denying it on a late-night background call.

The Washington Post‘s Jackson Diehl this morning noted that the plain text of the agreement favors the Iranian interpretation. Later in the day, the Daily Beast’s Eli Lake went further:

To be sure, the idea that Iran would be able to enrich uranium after a final status deal has been floated in negotiations for the last two years. But the offer represents a significant softening of earlier demands from the United States and even the Obama administration. During his first term, Obama offered Iran a deal that would have required Iran to import enriched nuclear fuel, but not allow Iran to make that fuel in facilities its government controlled…

Already this language has drawn fire from top Republicans. In a statement Sunday morning, House Majority Leader Eric Cantor (R-VA) said, “The text of the interim agreement with Iran explicitly and dangerously recognizes that Iran will be allowed to enrich uranium when it describes a ‘mutually defined enrichment program’ in a final, comprehensive deal. It is clear why the Iranians are claiming this deal recognizes their right to enrich.”

The substance of the deal will deepen concerns that Tehran intends to pocket the interim concessions and walk away. Patrick Clawson and Mehdi Khalaji, respectively the director of research and a senior fellow at the Washington Institute, had already expressed concerns weeks ago that “Khamenei has been laying the groundwork to walk away from any deal by warning that the West is untrustworthy and will not deliver on its promises — the same reasons he gave for walking away from the earlier nuclear deals.” Danielle Pletka, vice president of foreign and defense policy studies at American Enterprise Institute, was blunt in summing up what Iran got and what Iran gave, and how that might affect the regime’s calculations in walking away from the table:

Chatting last week with a prominent nuclear expert in Washington (a Democrat), we talked about the problems with the then prospective deal. Ironically, we were in complete agreement:… Sequenced agreements of this kind don’t work (viz: North Korea). The administration was too desperate for a deal. There will be no phase two… Iran has given nothing of substance other than a “pause” in its program… while the concessions to Iran on sanctions are in and of themselves not dramatic, the reversal in momentum for sanctions and the loss of the psychology of impenetrable sanctions is of immeasurable value to Tehran. Dealmakers will be back, letters of credit will once again be available, and it will be the beginning of the end of international cooperation on sanctions.

The asymmetrical structure of the deal – with Iran “freezing” its program but the international community chipping away at sanctions – may also influence whether Iran decides to abandon negotiations over a comprehensive deal. U.S. concessions are largely irreversible. Most straightforwardly, Iran will get to pocket the billions in financial relief its gets, using the funds to stabilize the Iranian economy, bolster its nuclear program, and fund its global terror network.

The arguably more significant danger, however, is that the sanctions regime cannot survive even the limited erosion that the deal entails. There are multiple scenarios under which the sanctions relief in the deal would trigger a downward spiral that irreversibly and substantially eroded the regime. The most immediate fear is that major powers and corporations will engage in a feeding frenzy to get into Iran: No one wants to be left behind as Iran’s market opens up, and so everyone tries to get in first. Pletka’s suggestion about the “psychology of impenetrable sanctions” is one mechanism for a downward spiral. Brookings Institute fellow Michael Doran earlier this week pointed to evidence that such a downward spiral was already beginning, with Paris looking to reopen a trade-related attaché office in Tehran next year.

Iran’s currency jumped more than 3 percent against the U.S. dollar on Sunday as news of a breakthrough deal to curb Tehran’s nuclear program raised hopes that the economy would start recovering from international sanctions… by reducing the chance of military action against Iran and raising the prospect of more sanctions relief in future, the Geneva pact may stem capital flight from the country and encourage a partial revival of domestic investment.

This could be enough to pull the economy out of the recession which has gripped it for most of the past two years, while encouraging Iranian and foreign businessmen to begin rebuilding trade ties. “We are feeling the positive sentiment in Iran,” Nariman Aflani, a foreign exchange trader at AFI Group, an Iranian civil engineering firm in Tehran, said by telephone. Prices of construction materials such as ceramics and cement in Iran are already coming down because people hope a gradual loosening of sanctions will make it easier for the country to obtain supplies from abroad, he said.